A former associate with Draper Fisher Jurvetson and a lecturer on entrepreneurship at Stanford University, he said he’d noticed that while accelerators were full of “19-year-old consumer guys,” there was another type of entrepreneur that wasn’t being served.

“I saw phenomenal entrepreneurs who’d been working (in business) for a decade and were old enough to be wise and young enough to be dangerous—and I was too,” he said.

Now Alchemist is celebrating its first birthday, along with an investment from Salesforce.com.

Salesforce declined to comment on the investment or disclose the amount. But the investment by the customer-relationship-management giant adds to the credibility of Alchemist, which is still one of the few Silicon Valley accelerators to focus solely on startups that sell to businesses, even as the popularity of business software grows.

It’s also important for Salesforce, which sees big business in getting startups to write applications for its platform.

Veeva Inc., for instance, a company started in 2006 by former Salesforce executive Peter Gassner to build Salesforce-based applications for the life sciences and biotechnology industries, went public in October and now has a market cap of nearly $4 billion.

“Maybe it’s just everybody recognizing that enterprise is where the money is, but with the Veeva IPO, everybody started realizing that the smaller microverticals are multibillion-dollar industries,” said Salesforce Senior Vice President Ron Huddleston.

In the year or so since Alchemist launched, 33 startups have graduated from its program and a dozen have gone on to raise money from prominent venture capital firms and/or strategic investors, including Salesforce.

Five of the Alchemist graduates so far have been founded by former employees of Salesforce, which is a company that attracts top talent, Mr. Belani said, so Salesforce’s investment is one way for the company “to keep a pulse on their talent” and not lose them.

The investment is also a recognition that even though most startups will continue to fail, those that do succeed are growing faster than ever before.

In November, Salesforce announced a new software platform, Salesforce1, and it’s now working with venture capital firms and other partners to encourage companies to develop applications for and even start businesses on this platform, which can deliver sales, service and marketing applications to any device.

This is a smart strategy, according to Emergence Capital General Partner Kevin Spain, whose venture firm—the sole backer of Veeva–works closely with both Salesforce and Alchemist.

Companies make software development decisions early, he said, and once they’ve been made, those decisions are hard to reverse. Also, regardless of what Salesforce is doing with startups on its own, it’s smart to be working with a quality accelerator like Alchemist, because “no company has a monopoly on the best entrepreneurs.”

Alchemist plans to invest in 35 to 40 companies this year, Mr. Belani said, taking them in three batches of six-month classes that overlap, like business school, so that all companies get the chance to work together.

The accelerator provides faculty drawn from a pool of prominent business executives and technologists in Silicon Valley along with mentors, customers who act as advisers on products and strategy, and off-the-record events at local venture capital firms.

One Alchemist graduate, Joshua Bloom, the chief executive of Big Data analytics company Wise.io Inc., described Alchemist as “a crash course in how (businesses that sell to businesses) are being constructed.”

Dr. Bloom is also an associate professor of astrophysics at the University of California, Berkeley. But he said the speech he gave in May at Alchemist’s Demo Day, where he had to choose just the right body language and just the right words, was the hardest presentation he’d ever done.

“You have eight minutes and you’re off, and there are a lot of things you have to touch on,” Dr. Bloom said.

Salesforce is Alchemist’s sixth investor—the others are Khosla Ventures, DFJ, US Venture Partners, Cisco Systems Inc. and SAP AG—but all parts of Alchemist’s ecosystem, from the faculty to investors to customers, are growing stronger, Mr. Belani said, and the bar for companies to get funded after they graduate is getting higher.

“I’m surprised by traditional corporate America’s desire to support Alchemist,” he said. “There’s a deep hunger by mainstream Fortune 500 companies to tap into Silicon Valley in deeper ways than I ever expected—I get lots of interesting calls from big companies.”

Alchemist’s next Demo Day is January 23. With the investment from Salesforce, the accelerator now has enough money to last into 2016.

Comments (2 of 2)

As the CEO/cofounder of BrightFunnel -- one of the 5 Salesforce.com alumni companies mentioned in the article -- I can attest to the need in the market that Alchemist and Ravi are addressing. We wouldn't have attracted the same quality of advisors and investors if it weren't for the Alchemist Accelerator.

8:56 pm January 20, 2014

Kris Duggan wrote:

Congrats Ravi and the entire Alchemist team! They are THE place for B2B startups to develop and grow.

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